The pressures of an ageing population, rising drug costs and limited budgets mean NHS trusts cannot “bury their heads in the sand” when it comes to pay, terms and conditions, said Chris Dowd, chief executive of Poole Hospital NHS Foundation Trust in Dorset.

Mr Dowd has been leading a group of 19 trusts - dubbed the ‘South West Consortium’ - which last year raised the deeply controversial subject of regional pay.

At the moment doctors and nurses throughout England are, like other public sector workers, paid the same no matter where they live.

The consortium dropped their regional pay plan after ministers made it clear they were unhappy with the move, despite earlier noises from George Osborne, the Chancellor, that he wanted to end national pay rates.

However, the consortium is now attempting to make staff work harder by changing conditions within existing national contracts, such as the nurses’ Agenda for Change deal.

It has published a report suggesting cutting annual leave by two days, making staff work another hour a week, and reducing redundancy and maternity pay. Consultants could also be put on local pay rates.

Mr Dowd said: “It’s inconceivable that we can continue to operate with existing pay, terms and conditions and maintain a service that we would all be proud of.”

He said the financial pressures bearing down on the NHS had to be confronted - which meant tackling pay, which accounted for 70 per cent of costs.

He said: “As responsible employers we can’t bury our heads in the sand and avoid the debate.”

Mr Dowd emphasised the consortium was not as yet looking to revive regional pay itself, by ditching national contracts.

But he said changing arrangements to get more from staff, and incentivise them to provide better care, was essential.

A Unison spokesman said: “If there are future threats to terms and conditions that would seriously damage industrial relations. We would be very concerned that they would have an effect on the quality of patient care.”

Any move away from national pay would be “fiercely resisted” by unions, she added.